Content Assessment: HSR Transaction Volumes See Steep Decline So Far in FY 2023 (August 2023 Update)
A short percentage-based assessment of the qualitative benefit of the recent post highlighting real-time monthly and annual HSR Act filing reporting by the FTC.
Editor’s Note: The Hart Scott Rodino Act (HSR Act) is a federal law that requires companies planning to merge or acquire certain assets or voting securities to notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) before completing the transaction. The HSR Act establishes the FTC and DOJ Premerger Notification Program, which is designed to allow the agencies to review the proposed transaction for potential antitrust concerns. For cybersecurity, information governance, and legal discovery professionals operating in the eDiscovery ecosystem, monitoring the monthly transaction reporting numbers published as part of the FTC and DOJ Premerger Notification Program can provide valuable insight into the potential impact of merger or acquisition activities and pulse rates on their respective areas of expertise.
Industry Update Summary
A Hart-Scott-Rodino Act Transaction Update (August FY 2023)
The Hart-Scott-Rodino (HSR) Act requires companies to file premerger notifications with the Federal Trade Commission and Department of Justice for proposed mergers or acquisitions that meet certain size thresholds. The number of HSR filings serves as an indicator of merger and acquisition activity.
According to the latest data, there were 3,259 HSR transactions in FY 2022 (October 2021 through September 2022). In comparison, there have been only 1,740 transactions so far in FY 2023 (October 2022 through September 2023), with one month remaining in the year. This represents a 46.6% decrease in deal volume year-over-year so far. In FY 2022, there was an average of 271 HSR transactions per month. So far, in FY 2023, the monthly average has dropped to 158 transactions.
The significant decline in HSR filings indicates merger and acquisition activity has slowed considerably amid economic uncertainty. However, there is still one month left in FY 2023 (through September 2023), so the year-over-year decline may not be as steep depending on deal activity in the final month.
For eDiscovery professionals, this signals decreased demand so far for services related to pre-merger investigations and second requests. Continued monitoring of HSR trends will be essential for anticipating eDiscovery workloads going forward.
Taken from the latest published Hart-Scott-Rodino (HSR) Premerger Notification monthly transactions as shared by the Federal Trade Commission (FTC) and augmented by released annual reports, the following transaction charts may be useful for law firms, legal departments and legal service providers seeking to understand the real-time pulse rate of Hart-Scott-Rodino Act mandated transaction reviews. As these reviews may lead to Second Requests, the charts may also be useful as a baseline for considering provider assertions regarding the depth, breadth, and volume of their Second Request support for this unique type of eDiscovery during specific time frames.
Chart 1: Monthly HSR Act Transactions Reported in the Fiscal Year 2023 (October-September)*1 – HSR Act Merger Transactions Reported – 2023 – August 2023 – Update
Chart 2: HSR Act Annual Transactions Reported in Fiscal Years 2000 – 2023*/**2 – HSR Act Merger Annual Transactions Reported – August 2023
*Monthly Real-Time Reporting First Report is October 2019 (Monthly Running Report)
**Based on Annual Reporting as Represented in Final Annual HSR Transaction Reports.
- HSR Act Reporting: A ComplexDiscovery Chronology
- FTC Annual Competition Reports (Hart-Scott-Rodino Act Reports)
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